It also warned of a challenging 2014 amid unfavourable exchange rates and slowing demand for medical equipment in China and Russia.

The company said that earnings before interest, tax and amortisation (EBITA) dropped by 22% to €314m in the first quarter to the end of March, missing consensus for €341m in a Reuters poll.

"Our first-quarter financial results reflect a challenging start to the year," chief executive Frans van Houten said in a statement.

He expressed confidence that Philips will meet medium-term 2016 financial targets, but said 2014 will remain "challenging."

The Dutch healthcare, lighting and consumer appliances group has reinvented itself since Van Houten took over as CEO in April 2011. It has cut costs, sold weak businesses and targeted new growth segments, which has sent Philips shares up more than 80% in the past two years.

But group sales declined by 4.5% in the first quarter, weighed down by slowing demand from China and Russia, currency effects and the suspension of CT scanner production at a factory in Cleveland.